NEW YORK, Nov 7 (Reuters) - The Dow industrials lost more
than 300 points in a sell-off on Wednesday that drove all major
U.S. stock indexes down over 2 percent in the wake of the
presidential election as the looming "fiscal cliff" debate and
Europe's economic troubles returned to the forefront.

The Standard & Poor's 500 Index posted its biggest daily
percentage drop since June, with all 10 S&P sectors solidly
lower and about 80 percent of stocks on both the New York Stock
Exchange and the Nasdaq ending in negative territory. Both the
Dow and the S&P 500 closed at their lowest levels since early
August.

Financial stocks and energy shares, two sectors that could
face increased regulation after President Barack Obama's
re-election, were the weakest on the day. The S&P financial
index lost 3.5 percent, while the S&P energy index
fell 3.1 percent. An S&P index of technology shares
slid 2.8 percent as the stock of Apple Inc
entered bear market territory.

Obama's victory had been anticipated, though many polls
indicated a close race between the president and Mitt Romney,
his Republican challenger, going into election day.

The election was considered a major source of uncertainty
for the market, but now the focus turns to the fiscal cliff,
with investors worrying that if no deal is reached over some
$600 billion in spending cuts and tax increases due to kick in
early next year, it could derail the economic recovery.

The Republican Party retained control of the U.S. House of
Representatives, while the Senate remained under Democratic
control.

David Joy, chief market strategist at Ameriprise Financial
in Boston, said this kind of divided government was
disappointing "since that configuration has resulted in gridlock
and there's no clear path towards unlocking that.

"It holds implications for how quickly we resolve the fiscal
cliff issue, or whether it gets resolved at all," said Joy, who
helps oversee $571 billion in assets.

The market's losses were broad, with pessimism exacerbated
by overseas concerns after the European Commission said the
region would barely grow next year, dashing hopes for
improvement in the short term.

Still, some viewed the day's slide as a buying opportunity,
saying it was unlikely that no deal would be reached on the
fiscal cliff and arguing that Europe's troubles were already
priced into markets.

"There's no question that Europe is lagging the rest of the
developed and emerging world, but stocks will find a base soon,
when investors start seeing through some of the smoke over the
region and cliff," said Richard Weiss, who helps oversee about
$120 billion in assets as a senior money manager at American
Century Investments in Mountain View, California.

The Dow Jones industrial average slid 312.95 points,
or 2.36 percent, to 12,932.73 at the close. The Standard &
Poor's 500 Index fell 33.86 points, or 2.37 percent, to
1,394.53. The Nasdaq Composite Index lost 74.64 points,
or 2.48 percent, to close at 2,937.29.

The S&P 500 closed below the key 1,400 level for the first
time since Aug. 30, while the Dow ended under 13,000 for the
first time since Aug. 2.

About 7.81 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, slightly below
last year's daily average of 7.84 billion, though Wednesday's
volume did surpass that of many recent sessions.

Contributing to the Nasdaq's decline, Apple shares fell 3.8
percent to $558, off more than 20 percent from an all-time high
reached earlier this year. That slump puts the stock of the
world's most valuable publicly traded company in bear market
territory.

The drop was a reversal from Tuesday's gains when voting was
under way. Defense and energy shares were among the market
leaders that day, causing speculation that some investors were
betting on a Romney win.

On Wednesday, an index of defense shares fell 2.9
percent, its biggest one-day drop in a year. Shares of United
Technologies dropped 2.9 percent to $77.68 while
Lockheed Martin sank 3.9 percent to $91.15.

Energy shares fell as investors bet that the industry may
see increased regulation in Obama's second term, with less
access to federal lands and water. Crude oil shed more than 4
percent while an index of coal companies plunged 8.8
percent. Coal firms Peabody Energy lost 9.6 percent to
$26.24 and Arch Coal sank 12.5 percent to $7.58.

"The notion that you may have gotten a respite on the
financial services side (with regulation) if Romney had been
elected is obviously being unwound," said Mike Ryan, chief
investment strategist at UBS Wealth Management Americas in New
York.

Healthcare stocks were mixed as President Obama's
re-election rules out the possibility of a wholesale repeal of
his healthcare reform law, though questions remain as to what
parts of the domestic policy will be implemented. The S&P health
care index shed 1.9 percent. In contrast, Tenet
Healthcare was the S&P 500's biggest percentage gainer,
up 9.6 percent at $27.34.

In 2008, stocks also rallied on election day, but then fell
by the largest margin on record for a day following the vote,
with each of the three major U.S. stock indexes posting losses
ranging from 5 percent to 5.5 percent.